the problem of general vs. firm-specific human capital investments.

We analyze an economy where banks are uncertain about firms' investment opportunities and, as a result, credit tightness can result in excessive risk-taking. In the competitive credit market, banks announce credit contracts and firms apply to them, as in a directed search model. We show that...

A financial stability fund set by a union of sovereign countries (e.g. the European Stability Mechanism), can improve countries's ability to borrow and lend, and to share risks, with respect to debt financing. Efficiency gains arise from the ability of the fund to offer long-term financial...

Over the last three decades we have observed a dramatic increase in the concentration of income at the very top of the distribution. This increase in income inequality has been especially steep in the managerial occupations in financial industries, where it has often been associated with greater...

Presentation of some new results showing how, under very general conditions, the recursive saddle-point method, pioneered by Marcet and Marimon, delivers the appropriate solution for contracting problems with intertemporal incentive constraints, with or without unique solutions. These results...

We construct an endogenous growth model incorporating Nelson and Phelps' insight that human capital and technology are complementary. By assuming that new technologies can initially be operated by skilled labor only, we formalize the idea that the payoff to human capital is positive only if...

How does the size of the transfer system evolve in the short and in the long run? We construct a model where taxation is distortionary because it discourages capital accumulation. We compare the Ramsey allocation with the time-consistent allocation. The latter can be interpreted as the outcome...